NEW DELHI: Equity indices extended gains for the 2nd straight session on Thursday and surged to 12-weeks high, led by gains in finance, metal and IT stocks.
The 30-share BSE index jumped 1,041.47 points or 1.87% to close at 56,858; while the broader NSE Nifty settled 287 points or 1.73% higher at 16,930.
Among the Sensex constituents, Bajaj Finance rallied the most by 10.68 per cent, followed by Bajaj Finserv that jumped 10.14 per cent after encouraging June quarter earnings.
The other gainers were Tata Steel, Kotak Mahindra Bank, IndusInd Bank, Infosys, Tech Mahindra and Nestle.
On the other hand, Bharti Airtel, UltraTech Cement, Dr Reddy’s, ITC and Sun Pharma were the laggards.
Here are the top reasons for today’s surge:
* Banking, finance stocks lead gains
Financial, banking and metal shares were the highlight of the day. Bajaj Finance soared 9.4% in its biggest intraday percentage jump since November 2020, topping gains on the Nifty 50, after the non-bank lender reported stronger-than-expected first-quarter results.
Bajaj Finance’s holding company, Bajaj Finserv, which is also expected to report results, decide on a bonus share issue and a stock split on Thursday, jumped 8.2%.
* US Fed rate hike
The US Federal Reserve’s 75 basis point hike in interest rates and Chair Jerome Powell’s comments dismissing chances of a recession offered some relief to investors who had been on the sidelines this week ahead of the policy meeting.
“We’ve taken on strong global cues after the Fed moved on expected lines. The Fed’s commentary that it would only move on large hikes in the future if data warrants it has further improved sentiment,” Gaurav Dua, head of capital market strategy at Sharekhan told Reuters.
* Strong global cues
Asian and European markets rose Thursday following a surge on Wall Street fuelled by hopes that the Federal Reserve could slow its pace of inflation-fighting interest rate hikes.
The dollar also struggled to bounce back from a sell-off — sitting at a three-week low against the yen — that came in response to comments by Fed chief Jerome Powell suggesting its next super-sized increase could be its last.
Markets in Europe were trading lower during mid-session deals. The US markets had ended sharply higher on Wednesday.
“Positive cues from global markets following the Fed policy outcome, as well as domestic large caps’ upbeat earnings, drove the market rally. The Fed’s decision was as expected, while their positive comment dismissing the possibility of a recession and hinting at a slower pace of rate hikes in the coming months boosted global sentiments,” Vinod Nair, Head of Research at Geojit Financial Services told PTI.
* Rupee appreciation
The rupee appreciated 26 paise to close at 79.65 (provisional) against the US dollar on Thursday, tracking a firm trend in the domestic equities.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.12 per cent at 106.58.
“Rupee traded positive on the back of positive capital markets and negative dollar reaction after Fed’s 0.75 bps hike with a data-driven further stance from Fed chair Powell,” Jateen Trivedi, VP Research Analyst at LKP Securities told PTI.
* Foreign investment flows
With appreciation of rupee, the foreign investors seem to have regained their lost faith in Indian stock markets.
In July, foreign fund outflows were significantly less as compared to that of past few months.
Till date, FIIs have withdrawn Rs 9,251.7 crore from Indian markets, as compared to Rs Rs 58,112 crore and Rs 54,292 crore in June and May, respectively. This has raised hopes that foreign inflows may eventually rise.
(With inputs from investors)